The FBMKLCI slid 3.99pt to close at 1,624.97 yesterday as the index managed to pare down earlier losses amid selective buying of index-linked counters. Meanwhile, Asian stocks dropped as investors favoured safer assets after Italian Prime Minister Matteo Renzi said he would resign following a heavy defeat in a referendum on constitutional reform. The MSCI Asia Pacific Index lost 0.6%. The FBMKLCI’s top gainers were British American Tobacco (+1.9%), Hap Seng Consolidated (+1.7%) and Hong Leong Bank (+0.8%) while the top losers were Genting Malaysia (-2.1%), PPB Group (-2.1%) and Genting Bhd (-1.9%). In the broader market, losers outpaced gainers 440 to 297 with 347counters unchanged. Turnover was 1.14b shares valued at RM1.35b. From a technical perspective, the FBMKLCI is expected to continue consolidating in the near term amid the formation of a bearish candlestick yesterday. This is further reinforced by the downtick in the RSI, which suggests buying momentum would continue to ease over the next few days. But we expect the index to resume its uptrend once the current consolidation phase ends. Support and resistance levels are maintained as follows:

• Support: 1,612,1,600
• Resistance: 1,665, 1,680

US stocks closed higher on Monday as gains in the financials, basic materials and technology sectors led shares higher. The DJIA gained 45.82pt, or 0.24%, to close at 19,216.24 while the S&P500 edged higher by 12.76pt, or 0.58%, to close at 2,204.71. European stocks were mostly higher, but Italy’s FTSE MIB index fell 0.2% after Italian voters rejected proposed constitutional changes to the national constitution on Sunday. Prime Minister Matteo Renzi said he would resign. Rising stocks outnumbered declining ones on the NYSE by 2,266 to 892 and 81 ended unchanged.

Source: UOB Kay Hian Research - 6 Dec 2016